Competition Effects And Antitrust Policy Of Mergers And Acquisitions Leading To Multi-market Contact In The Internet Industry

"Internet plus" represents mixture of information technology and traditional industries.It helps to promote transformation and upgrading of the industrial structure,while cultivating a series of new industries to leading ones.Along with gradual deepening of "Internet plus",competition among companies in the Internet industry becomes stronger and stronger,which leads to a new wave of optimization and integration.304 mergers and acquisitions among companies in the Internet industry happened in 2015,which occupied 11.3%of the total number in all industries.Meanwhile,all those mergers were involved in 145.566 billion Yuan,which occupied 13.9%of the total amount of money in all industries,ranking first.The most significant characteristics of mergers in the Internet industry lay in wide involvement and deep participation of Baidu,Alibaba and Tencent,which are always called as BAT for short.BAT achieves simultaneous competition in more than one market segments through mergers with Internet companies,which takes shape in the market structure of the so-called multi-market contact.As a result,Internet companies controlled by BAT,which always hold rather high market share in their own market segments,tend to take highly synchronous price actions,and mergers among them happen frequently.Under the market structure of multi-market contact,it's meaningful to do deep research on price and merger actions of BAT and companies controlled by BAT considering technical economic characteristics of the Internet industry.There still.exist on consensus on how and why Internet companies take such price and merger actions.Accordingly,this paper raises three main research questions as following.Firstly,Internet companies controlled by BAT form stable price collusion in their own market segments,and this paper plans to figure out influence of multi-market contact on stability of collusion.Secondly,BAT keeps entering new market segments based on current situation of multi-market contact.The author is interested in incentives of continuous expansion of multi-market contact.Thirdly,now that companies holding high share in market segments have reached stable collusion,why they still choose to merger their main rivals which are controlled by another magnate?This paper also wishes to do analysis on influence of multi-market contact on companies' merger decisions.Internet industry is consisted of many typical two-sided markets.This paper tries to answer questions above from the angle of market structure and economic characteristics of Internet industry.Firstly,about multi-market contact,existed literatures share the common view that it's beneficial to collusion.However,there exists lack of analysis on competition effects of multi-market contact under the condition of two-sided markets.Secondly,there exist indirect network effects among market segments.Common-control companies in different relevant markets act as consumer accesses and raise market demands for each other.There still exist no literatures on multi-market contact based on two-sided markets,which leads to lack of consideration of indirect network effect.Finally,there exists demand shocks mainly deriving from unpredictable policy change in Internet industry,and these shocks are independent across market segments.Existed studies reach the consensus of deterrence effects of demand shock on collusion,but few researchers pay attention to stability of collusion with the co-existence of multi-market contact and demand shock.When it comes to the theoretical part,this paper constructs a single-market indefinitely repeated game model framework with imperfect information and demand shock at first.Game players chase for maximization of current value of expected payoff in the repeated game.This model aims to illustrate existence of equilibrium and influence of demand shock on collusion.Furthermore,this paper refines the general model to a Betrand duopoly game with multi-market contact and indirect network effect,aiming to do analysis on collusion and merger decisions of game players.They set price to choose among maintaining collusion,deviating collusion and merger.On the one hand,this model studies influence of multi-market contact on collusive behaviors,as well as collusion effects of demand shock.On the other hand,this model identities the merger incentives,as well as influence of multi-market contact and indirect network effect on merger incentives.At last,this paper gives specific realization to key parameters of the theoretical model in order to do numerical analysis on it,which finally verifies the model conclusions.According to the model,price and merger behaviors of Internet companies are influenced by multi-market contact,demand shock and indirect network effect to different degree.Multi-market contact is beneficial to collusion,while demand shock is harmful to that.With the growing of the strength of multi-market contact,the collusion-deterrence effects of demand shock become weaker and weaker,which presents companies incentives to expand their multi-market contact to make collusion more stable.Though they have reached stable collusion,they still have incentives to merge rivals in market segments to enlarge the scale of users,which further leads to growth of users in other market segments through indirect network effect.Meanwhile,the stronger multi-market contact is,the more incentives companies have to launch a merger.Based on the theoretical model,this paper discusses antitrust policies of mergers in the Internet industry.This paper is divided into five chapters,including introduction to research background and research questions,literature review,qualitative analysis on influence of key factors on company behaviors,construction and solution oftheoretical model,and antitrust policies of mergers in the Internet industry.